Victoria has been exposed to a $361 million cost shortfall due to poor regulation of mining sites, an audit has found.
The Rehabilitating Mines report, tabled in parliament on Wednesday, looked into whether Victoria was effectively managing its exposure to liability to rehabilitate abandoned and legacy mines.
The Department of Jobs, Precincts and Regions is responsible for regulating mining rehabilitation in the state through its Earth Resources Regulation unit.
Of the 1394 mines and quarries in Victoria that should have rehabilitation bonds, the audit determined 578 did not.
“We found that (the) DJPR is not effectively regulating mining rehabilitation and the state is exposed to significant financial risk because some sites have been poorly or not rehabilitated at all,” the audit read.
“These sites present risks to Victorians and the environment.”
The ERR said it holds $813 million in rehabilitation bonds, $591 million of which comes from three open-cut coal mines in the Latrobe Valley.
According to a preliminary assessment, deemed likely to be “low” by the audit, Victoria would need another $361 million in bonds to restore its mines and quarries.
The shortfall has been blamed on a long list of “systemic regulatory failures” by the ERR that include:
* Using outdated cost estimates
* Not periodically reviewing bonds
* Returning bonds before assuring site rehabilitation
* Approving inadequately specified rehabilitation plans
* Lack of enforcement activities
The audit found the mining regulator’s rehabilitation bond calculator hasn’t been updated since 2010, meaning it doesn’t take into account a nine-year, 19.8 per rise in the Consumer Price Index.
The calculator was expected to be upgraded by December but the coronavirus pandemic has halted consultation plans.
Analysis of bond rehabilitation reviews revealed 91.7 per cent were not on track to be completed on time, with 68.6 per cent overdue by an average of nine years, and 23.1 per cent yet to be scheduled for evaluation at all.
The ERR improved its performance after separate inquiries into the 2014 Hazelwood mine fire, the report acknowledged, which burned for 45 days and blanketed the town of Morwell in thick smoke.
However, the audit said early reforms had been “broad” and mining rehabilitation issues only began being addressed in mid-2018.
The audit made 10 recommendations including that the DJPR, which fosters the mining industry, provides advice to relevant ministers to eliminate the “conflict of interest” of having the ERR reside within its building.
It was accepted in principle.